During the past months, the economic situation has worsened due to numerous events. This news article recently made headlines here in Trinidad:
http://www.newsday.co.tt/business/0,219611.html
The genesis of this issue lies in the economic assault by several international banks, mainly in the US and Europe, whereby they refuse to continue carry their business, as part of a “de-risking” strategy. The Caribbean has been labeled as a tax haven and accused of lenient tax regimes and avenues for money laundering and terrorism financing, despite no evidence to prove this. Many correspondent banks claim they have weighed the marginal profits earned from doing business against the potential large fines and penalties due to lack of compliance as well as the reputational damage that could result and deemed it too much of a risk to continue to pursue business in these jurisdictions. US perceptions of banks in the Caribbean have also been heavily influenced by comments from both Congress and the State Department, which have only served to compound the negative view of banks in Caribbean regions.
On the contrary, foreign banks have a higher rate of return in the Caribbean than their branches in North America, or anywhere else. Evidently, foreign banks do well in this region but they argue that this higher rate of return is no longer certain because of weaker economies and the cost of doing business in the region has been increasing.
The Caribbean community (CARICOM) is concerned because if all correspondent banking relations are withdrawn, we will be isolated from the rest of the world. We won't even be unable to carry out basic bank transactions: remittance transfers, international trade, and the facilitation of credit card settlements for local clients, among other services. Last year, the World Bank, said “the Caribbean seems to be the region most severely affected” but the de-risking phenomenon has already affected countries in Asia, Africa and Latin America in a major way, and more terminations of correspondent accounts and loss of banking services can be expected worldwide.
This is surely “ an economic assault” tantamount to an economic blockade against the Caribbean countries. I will speak for Trinidad when I say that there are anti-fraud and institutions that effectively deal with money laundering. The minister of finance has insisted that they have complied with all global regulatory standards, including those established by the Financial Action Task Force (FATF) and the Global Forum, and have been scrutinized in every detail by the IMF and other multilateral institutions.” Basically we do all we can to meet these internaional standards and play by their rules, yet they view us as high risk.
In response to these alarming articles, Caribbean nationals express their concerns about our future economy and international trade.
" The economy of most Caribbean island depends on international trade and hence international payments. It should be avoided at all cost that any Caribbean islands could be eventually excluded from the international payments process due to the so called de-risking policy of international correspondent banks.
This is not a fight that the Caribbean banks or even individual Caribbean countries can fight alone. It is therefore imperative to unite forces all across the Caribbean and get support of international organizations such as the World Bank and the United Nations to safeguard the Caribbean banking sector and hence the Caribbean community from being excluded from international payments."
Some foreign banks have already closed numerous branches and soon may exit the region entirely:
http://news.co.tt/public_html/article.php?story=20150331152656649
The unwillingness of foreign banks to deal with Caribbean countries will alienate us from foreign trade and decimate our economy. There is also a shortage of US currency in Trinidad and local businesses (large and small) are deeply affected:
http://www.trinidadexpress.com/20150624/letters/us-shortage-taking-toll-on-business
With so few options left and a shrinking economy, local citizens may have no choice but to adopt cryptocurrencies to stay alive. Despite being a third world country, many young people now are becoming more computer and technology literate and are actively seeking solutions to these aforementioned problems. It would not surprise me if we became the first "crypto-country" to fully operate on cryptocurrencies and do away with traditional money.
This is a post in response to:
https://steemit.com/money/@bravenewcoin/bravenewcoin-banks-abandon-the-caribbean-local-bitcoin-exchange-experiences-33-increase-in-users-every-month-since-february#@kazumi/re-bravenewcoin-bravenewcoin-banks-abandon-the-caribbean-local-bitcoin-exchange-experiences-33-increase-in-users-every-month-since-february-20160722t154531096z
